ASSURANCE

Although the integrated reporting movement is still in its early stages, the issue of whether and how to perform an integrated audit or assurance opinion has already emerged. The traditional audit opinion on the financial statements is a form of "positive" assurance that proclaims everything was done right. To the extent nonfinancial information has an audit opinion, it almost always receives a negative assurance opinion, which roughly translates to "we couldn't find anything seriously wrong." A financial audit opinion is largely binary. The company either gets a clean audit opinion or it does not (a "qualified opinion"), and the latter is rare because of the negative signal it sends to the market. Generally, the company and its auditor work hard to make sure the audit opinion is a clean one.51

For nonfinancial information, degrees of assurance range from self-assurance (the company says, "Trust me."), through limited assurance (from an accounting firm or other service provider), to full assurance (positive). Although rare, full assurance almost always comes from a Big Four accounting firm. Limitations on a full assurance opinion for nonfinancial information include the lack of measurement, reporting, and auditing standards. In addition, two other significant challenges are acquiring or developing the capabilities necessary to provide assurance on nonfinancial information and litigation risk, especially in the United States.52 Very few companies have even come close to having a positive assurance opinion on an entire integrated report, although Philips appears to be making progress toward that objective (see inset "Assurance on the Philips Annual Report").

Roughly half of the firms (55%) had some type of assurance opinion on their nonfinancial information, of which three-quarters (76%) came from a Big Four accounting firm. The others were typically from a boutique sustainability consulting firm. In our sample, we did not find any example in which there was a single audit opinion for both financial and nonfinancial information. In some cases, the same audit firm provided both opinions; in others, two different firms did.

Assurance on the Philips Annual Report

Assurance on nonfinancial information has been evolving since Philips published its first integrated report in 2008. The company and its independent auditor, KPMG, faced two significant hurdles: the "quality of the internal control systems within the company for both financial and environmental, social, and governance (ESG) data, and the creation of global standards for measuring and reporting nonfinancial information."53 Table 7.3 provides insights into progress made by Philips and KPMG in resolving the controls and standards issues.

TABLE 7.3 Assurance on Nonfinancial Information at Philips

Year

Scope54

Criteria58

Standard55

Opinion57

2008

Limited assurance

GRI G3

ISAE 3000

Does not appear to be

unfairly stated

2009

Limited assurance

GRI G3

ISAE 3000

Does not appear to be

unfairly stated

2010

Limited assurance

GRI G3

ISAE 3000

Nothing came to our attention

2011

Limited assurance

GRI G3.1

ISAE 3000

Nothing came to our attention

2012

Reasonable assurance

GRI G3.1

ISAE 3000

Fairly presented

2013

Reasonable assurance

GRI G4

ISAE 3000

Presents fairly

The "Scope" and "Opinion" columns are inextricably linked. Scope refers to the type of procedures performed in order to support the level of opinion provided. For example, evidence to support a limited assurance engagement is typically obtained primarily through analytical procedures and inquiries, whereas a combination of procedures, such as inspection, observation, confirmation, recalculation, reperformance,58 analytical procedures, and inquiry are generally used to obtain reasonable assurance.

The progression from limited assurance (2008-2011) to reasonable assurance (2012 and 2013) suggests that KPMG has concluded that controls over Philips's nonfinancial reporting systems had become more effective as a result of investments made by the company to improve internal controls, processes, and nonfinancial reporting systems, which provided a higher level of data quality.

Consistent reference over the six-year period to GRI Guidelines as the "Criteria" against which the Philips's disclosures were measured and KPMG's use of International Standard on Assurance Engagements (ISAE) 300059 over the same time frame is an indication that rigorous and institutionally legitimate standards for measuring and reporting nonfinancial information exist. To be clear, KPMG was not providing assurance on the Philips integrated report as a whole. Their assurance was applicable only to the disclosure of information made in compliance with GRI Guidelines.

If GRI Guidelines meet the suitable criteria test of ISAE 3000, then there is a possibility that the international accounting firms might eventually view "The International <IR> Framework" as furnishing appropriate criteria for the provision of limited and reasonable assurance. The question, admittedly a large and challenging one, is "Will 'The International <IR> Framework' be accepted by corporations and accounting firms as institutionally legitimate and therefore suitable criteria for an ISAE 300060 assurance engagement?"

NOTES

1. International Integrated Reporting Council. "Consultation Draft of the International <IR> Framework," theiirc.org/consultationdraft2013/, accessed April 2014. The Consultation Draft was used because "The International <IR> Framework" had not been published by the time we started our data collection process.

2. Chapter 7 could not have been written without Liv Watson, Director of New Markets at Workiva (formerly WebFilings), Brad Monterio, Managing Director at Colcomgroup, and David Colgren, President and CEO at Colcomgroup. We are deeply grateful to them for their time, effort, and sense of humor during this intense project. These three individuals executed all of the data collection and we worked closely with them in analyzing the data and writing this chapter.

3. Although we used the Consultation Draft to develop the coding scheme, we used the "The International <IR> Framework" as the basis for analyzing the results.

6. CEMIG (Brazil), 2012 Annual and Sustainability Report. This is an example of "Financial capital." The discussion of "Financial capital" resembles disclosures typically found in the U.S. Securities and Exchange Commission Form 10-K. Under a major caption of "Capital Resources and Liquidity," the capital intensive nature of the business and liquidity requirements are presented in terms of cash generated through operational activities, net cash consumed through investment and financing activities, and a discussion titled "Raising Capital and Debt Management Policy," cemig.com.br/en-us/the_cemig/ Documents/2012_annual_sustainability_report.pdf, accessed March 2014.

7. Lassila & Tikanoja (Finland), Annual Report 2012. This is an example of "Manufactured capital." The report describes how the company uses its physical assets to help customers reduce waste volumes, extend the useful lives of properties, recover materials, and decrease the use of raw materials and energy. The report addresses initiatives such as reducing electricity, heating or water consumption, collecting and transporting waste for recovery, and providing secondary raw materials to industrial customers. www .lassila-tikanoja.fi/annualreport2012/, accessed March 2014.

8. Singapore Stock Exchange (Singapore), Annual Report 2013. This is an example of "Intellectual capital." One page with a graphic and narrative describes Singapore Stock Exchange as a full-service exchange with world-class trading and clearing platforms for securities and derivatives products. Among other points, the narrative specifically covers a range of issuer services, promotes its trading engine as the world's fastest, and highlights their ability to offer a range of real-time price information for securities and derivatives markets, investorrelations.sgx.com/annuals.cfm, accessed March 2014.

9. Inditex (Spain), Annual Report 2012. This is an example of "Human capital." A 23-page section, "Commitment to People," is an in-depth discussion of corporate programs and actions to develop self-sufficient and responsible staff, and strengthen links with the community through a wide range of social investment programs, https://inditex.com/en/investors/investors_ relations/annual_report, accessed March 2014.

10. Telekom Slovenije (Slovenia), Annual Report 2012. This is an example of "Social and relationship capital." The company explains in detail its communications with stakeholder groups such as employees, shareholders, suppliers, communities, media, and governmental and nongovernmental organizations. In addition to creating long-term value for shareholders, the company sees itself as being operated for the benefit of employees, the wider community, and other stakeholders, porocilo.telekom.si/en/, accessed March 2014.

11. AngloGold Ashanti (South Africa), Integrated Report 2012. This is an example of "Natural capital." Mining transforms the earth and the company's report section "Responsible Custodianship of Water and Land" focuses on reducing raw water consumption and improvement in integrated water management practices and discharge water quality. It includes a discussion of the importance of land and land use in exploration, mining, and biodiversity, as well as the choices involved in digging a mine and mitigating the effects of tailings facilities, stockpiles, and waste rock dumps to avoid sensitive areas, within the constraints of economics and geology, aga-reports.com/12/, accessed March 2014.

12. Another potential factor is that many of the South African companies used Global Reporting Initiative's Guidelines and these cover topics like human and natural capital.

13. "Manufactured capital" is composed of physical objects (as distinct from natural physical objects) that are available to an organization for use in the production of goods or the provision of services. International <IR> Framework, p. 11. The sector breakdown of the South Africa companies was seven mining (30%), seven financial services (30%), two telecommunications (8%), one each from energy (4%), food and beverage (4%), media (4%), metal products (4%), pharmaceutical (4%), retail (4%), textiles and apparel (4%), and one conglomerate (4%).

14. Banco do Brasil (Brazil), Annual Report 2012. This is an example of the Content Element "Organizational overview and external environment." The "Corporate Profile" section of the annual report includes an overview of mission, values, vision, market environment, growth potential of the loan portfolio, strategic relationships, technology platforms, and area of banking operations. www4 5 .bb.com.br/docs/ri/ra2012 /eng/downloads/BB_ AR_2012.pdf, accessed March 2014.

15. Umicore (Belgium), Annual Report 2012. This is an example of the Content Element "Governance." Umicore's "Corporate Governance Review" includes detailed sections on the corporate governance framework, corporate structure, shareholders, the Board of Directors, Executive Committee, relevant information in the event of a takeover bid, conflicts of interests, auditor selection, corporate Code of Conduct, market manipulation, and insider trading and compliance with the 2009 Belgian Code on Corporate Governance, umicore.com/reporting/statements/governance/corporate-governance-review/, accessed March 2014.

16. Kumba Iron Ore (South Africa), Integrated report 2012. This is an example of the Content Element "Risks and opportunities." A four-page section begins with a brief discussion of their risk management approach, roles and responsibilities, and risk management process, including identification, analysis and controls, mitigation initiatives, and reporting and monitoring. The report identifies each key risk with a description of the root cause, potential impacts, and risk mitigation actions, kumba.co.za/reports/kumba_ar2012/ integrated/pdf/integrated_report.pdf, accessed March 2014.

17. Aviva (United Kingdom), Corporate responsibility report 2012. This is an example of the Content Element "Strategy and resource allocation." Aviva uses graphics and brief contextual narrative to describe its business model, the company's strategic objectives, and how sustainability principles are incorporated into the strategy and delivery of products and services. The report includes a forward-looking discussion of opportunities and risks affecting the business, aviva.com/library/reports/2012cr/docs/full-report, pdf, accessed March 2014.

18. BAE Systems (United Kingdom), Annual Report 2012. This is an example of the Content Element "Business model." The business model is discussed with the context of a section titled "Strategic Review." In addition to the business model, the "Strategic Review" includes CEO commentary, key performance indicators, and a strategy overview. A business model graphic has four components: customer focus, program execution, financial performance, and responsible behavior. Each component in the matrix is linked to more detailed discussions in the report and additional links take the reader to further information about markets and opportunities, reporting segments, key resources, and governance. bae-systems-investor-relations-v2.production.investis.eom/~/media/ Files/B/BAE-Systems-Investor-Relations-V2/Annual%20Reports/BAE-annual-report-final.pdf, accessed March 2014.

20. Syngenta (Switzerland), Annual Review 2012. This is an example of the Content Element "Outlook." Syngenta does not present a separate section on Outlook. The company provides stakeholders with a glimpse into future innovation, growth prospects, and new products in its discussion of "Performance." For example, the discussion of soybeansâ€”the world's primary source of vegetable proteinâ€”includes anticipated accomplishments in disease resistance and herbicide tolerance in 2015 and 2020. syngenta.com/global/ corporate/SiteCollectionDocuments/pdf/publications/investor/2 013/annual-report-2012/syngenta-annual-review-2012-english.pdf, accessed March 2014.

21. "The International <IR> Framework," p. 17.

22. Ibid., p. 5.

23. This element includes the organization's mission and vision; culture, ethics, and values; ownership and operating structure; and key quantitative information like the number of employees, revenues, and other significant changes from a prior period. It also describes the industries and countries in which the company operates; micro- and macro-economic conditions; customer demands and competitors; and significant aspects of the legal, commercial, social, environmental, and political context. "The International <IR> Framework, " pp. 24-2 5.

24. Important aspects of governance include the company's leadership structure (including the skills and diversity of the leadership team); specific processes used to make strategic decisions and monitor the culture of the organization; particular actions by those charged with governance to monitor the strategic direction of the organization and its approach to risk management; whether the company's governance practices exceed minimum legal requirements; and how remuneration and incentives are linked to value creation. "The International <IR> Framework," p. 5.

25. "The International <IR> Framework," p. 5.

26. Although we found some effective infographies that illustrated business models (with some even linking them to strategic priorities), the information was not consumable because it was unstructured. How does one get data out of an infographie except to manually rekey or scrape that data?

27. "The International <IR> Framework," pp. 25-2 7.

28. Ibid., p. 5.

29. Risk and opportunity assessment includes the specific circumstances in which something would come to fruition, recognizing that this involves a degree of uncertainty. Citing the Guiding Principle of "Materiality, " low probability events that could have large consequences should be discussed. The company should also discuss what it is doing to identify and mitigate risks, and identify and take advantage of opportunities. "The International <IR> Framework," p. 2 7.

30. "The International <IR> Framework," p. 5.

31. In addition, factors that differentiate a companyâ€”which are the source of competitive advantageâ€”should be discussed, including the role of innovation, how the organization develops and exploits intellectual capital, and the extent to which the embedding of social and environmental issues in company strategy is a source of competitive advantage. Finally, the company should explain if and how stakeholder engagement had a role in the formulation of the company's strategy and resource allocation plans. "The International <IR> Framework," pp. 2 7-28.

32. "The International <IR> Framework," p. 5.

33. To the extent possible, quantitative key performance indicators (or narrative explanations when not possible) showing positive and negative relationships ("connectivity") between financial performance and the other capitals should be provided. Finally, the company should explain the impact regulations have had or could have on performance, including the performance implications of noncompliance. "The International <IR> Framework," p. 28.

34. "The International <IR> Framework," p. 5.

35. The "Outlook" discussion should also include the implications of anticipated changes in financial performance, accomplishing strategic objectives, and the availability, quality, and affordability of the capitals. This may involve forecasts, projections, and sensitivity analyses. Finally, the organization should take into account legal and regulatory requirements and how these might change. "The International <IR> Framework," pp. 28-29.

36. The company received a score of 0 if the materiality matrix was on its website but not in the PDF integrated report itself. When there was a materiality matrix in the report, the company got a 1, 2, or 3 based on the quality and effectiveness of the matrix.

37. WĂˇrtsilĂˇ (Finland), Annual Report 2012. This is an example of the Special Factors of "Material risks identified," "Explained how material risks are handled/mitigated," and "Used a materiality matrix." The report presents information about material issues as a "heat map," which indicates whether a risk or opportunity is new, increasing, decreasing, or static. It also identifies property and casualty insurance coverage. A detailed matrix discusses individual risks with linkage to a five-tier (low to high) colored-coded profile, policies and guidelines addressing each risk, and the management group responsible for management and mitigation. wartsilareports. com/en-US/2012/ar/frontpage/, accessed March 2014.

38. DSM (Netherlands), Integrated Annual Report 2012. This is an example of the Special Factor "Stakeholder responsiveness demonstrated and explained." The company's views on stakeholder engagement begin, "DSM believes and invests in a strategic and pro-active dialogue with its key stakeholders not only to share thoughts and views, but also to deepen the company's insights into governmental, societal and customer trends, drivers and needs." A materiality matrix indicating how issues are prioritized by society and the business is presented. DSM's views on the role of business in society includes a paragraph or two on critical issues such as water management, food safety, and dialogue throughout the company's value chain. A graphic with supporting narrative explains how the company engages with seven stakeholder groups and how the company responds to stakeholder interests, dsm.com/content/ dam/dsm/cworld/en_US/documents/integrated-annual-report-2012 .pdfPfile action=saveFile&wcm_dsn=dsm.com, accessed March 2014.

39. SAP (Germany), Integrated Report 2012. This is an example of the Special Factor "Connectivity of information demonstrated or explained." To the best of our knowledge, SAP is the only company that published the entire integrated report in an online version. SAP uses an interactive graphic to demonstrate how material issues and ESG performance are linked to overall financial performance. In addition, the linked narratives within the connectivity graphic weave a thread from, for example, strategic objectives and critical issues to the environmental and societal context in which SAP operates. www . sapintegratedreport. com/2012/ en/key-facts/connecting-financial-and-non-financial-performance.html, accessed March 2014.

40. American Electric Power (United States) 2013 Corporate Accountability Report. This is an example of the Special Factor "Website content supporting the integrated report." Our evaluation criteria focused on access from the integrated report to other communications, financial information, and other supporting areas of the corporate website. The online AEP integrated report includes clearly labeled tabs guiding the user to a high-level overview, strategy, opportunities and risks, performance, engagement, and videos. The website includes links to other reports published by AEP such as those provided to GRI, CDP, coal supplier survey, and Clinton Global Initiative. AEP also developed an interactive iPad app for their 2013 Corporate Accountability Report, aepsustainability.com, accessed March 2014.

41. BS Financial Group, Sustainability Report 2012. This is an example of the "Special Factor Letter from CEO or CSO addressing organizational sustainability." This is the first time that BS Financial Group published financial and sustainability information in a single document. The CEO message is brief and would benefit from more detail; however, the content presents a clear understanding on the CEO's belief that environmental, economic, and social performance are inextricably linked, eng.bsfng.com/02/0103.jsp, accessed March 2014.

42. Thirty-eight companies received a score of "3" on Stakeholder engagement demonstrated and explained.

43. "The International <IR> Framework," p. 17. Through stakeholder engagement, the company learns how different stakeholders perceive value and what is important to them; identifies material matters, including risks and opportunities; and becomes aware of trends that could become significant and affect materiality in the future. Stakeholder engagement is an ongoing process that is accomplished through day-to-day contact with employees and customers and through focus on particular issues, such as planning a facility expansion in a local community. Stakeholder engagement contributes to integrated thinking (and vice versa) and assures a sense of stewardship on the part of the company for the capitals it uses to create value, pp. 17-18.

44. GRI G4 Sustainability Reporting Guidelines "Reporting Principles and Standard Disclosures" and "Implementation Manual" provide comprehensive guidance for the preparation of sustainability reports by organizations, regardless of their size, sector, or location. The guidelines make it clear that the determination of materiality and stakeholder engagement are inextricably linked. https://globalreporting.org/reporting/g4/Pages/ default.aspx, accessed April 2014. Since its founding in 1995, Account-Ability has been on the frontlines of providing guidance on stakeholder engagement and materiality for nonfinancial information. Both topics have been addressed in several AccountAbility publications including, AA1000 AccountAbility Principles Standard 2008 (accountability.org/ standards/aal000aps.html), AA1000 Assurance Standard 2008 ( accountability.org/standards/aalOOOas/index.html), AA1000 Stakeholder Engagement Standard (accountability.org/stan-dards/aalOOOses/index.html), Guidance for Reporting Organisations Seeking Assurance to AA1000AS 2008 (accountability.org/ about-us/publications/guidance-for-l.html) and "Redefining Materiality II: Why It Matters, Who's Involved and What it Means for Corporate Leaders and Boards," accountability.org/about-us/news/ announcements/redefining-materiality-ii.html. All AccountAbility URLs accessed April 2014.

45. "The International <IR> Framework," p. 22.

46. Ibid., p. 16.

47. Connectivity involves showing how all the Content Elements are related to each other from a system perspective, such as relationships between the capitals, how the company's strategy adapts to new risks and opportunities, and how the organization's strategy and business model are adapting to a changing external environment. Connectivity includes explaining the relationships between past, present, and anticipated future performance; showing the relationship between different types of performance, such as customer satisfaction and revenue growth, and investment in human capital and market share; providing both quantitative and qualitative information, such as narrative explanations for KPIs; consistency between important internal metrics and those reported externally; consistency between all of the company's external communications; and having a well-structured and well-presented integrated report that is free from jargon. "The International <IR> Framework," pp. 16-17.

48. "The organization seeks a balance in its integrated report between concision and the other Guiding Principles, in particular completeness and comparability. "The International <IR> Framework," p. 21.

49. "The International <IR> Framework," p. 8.

50. Often the link in the report only took the user only to the company website, requiring a significant amount of navigation to find specific integrated report-ing-related content. In other cases, the link led to the PDF file of the report for download and it was not interlinked to other content on the website. Which part of the company's website a link took the reader to varied, such as "About Us," "Investor Relations," or "Sustainability."

51. Qualified auditors' reports can take one of several forms. The independent auditor may issue an adverse opinion (the financial statements, taken as a whole, do not conform to international or U.S. accounting principles), a disclaimer of opinion (no expression of an opinion), a limitation of scope (the auditor could not perform all necessary procedures or tests), an "except for" opinion (a specific departure from international or U.S. accounting principles), and other modifications including a going concern or a change in accounting principles. The U.S. Securities and Exchange Commission will not accept financial statements with an auditors' report that disclaims an opinion, expresses an adverse opinion, includes an "except for" qualification due to a departure from GAAP or a qualification with respect to the scope of the audit. U.S. Securities and Exchange Commission. Division of Corporation Finance. Staff Reporting Manual, Section 4200, Accountants' Reports, sec.gov/divisions/corpfin/cffinancialreportingmanual.shtml, accessed April 2014.

52. There are several major challenges to providing an opinion on the nonfinancial information contained in an integrated report. One, developing a global set of credible standards for measuring and reporting nonfinancial information which are viewed as the equivalent of International Financial Reporting Standards and U.S. Generally Accepted Accounting Standards for accounting and reporting. Two, developing rigorous methodologies for providing positive assurance on nonfinancial information similar to audits of financial statements. Three, integrating standards and assurance methodologies for financial and nonfinancial information in a way that provides a "true and fair view of an organization's sustainability," which in the case of assurance on an integrated report means taking into account the extent to which the company is meeting the needs of other stakeholders in order to be able to continue creating value for its shareholders. In addition, once assurance goes beyond the financial statements and notes to include the Guiding Principles and Content Elements of "The International <IR> Framework," a much broader range of professional capabilities becomes necessary. None of the major accounting firms are even close to possessing these capabilities, although some are working to develop them. Finally, litigation risk is a hot topic in the auditing profession, especially in the litigious United States. Today, the debate centers on the audits of financial statements, especially when what is perceived to be an audit failure is confounded with a company's bankruptcy, or when major fraud, especially in top management, is detected. The global debate must be expanded to include liabilities that will emerge from giving as much prominence to nonfinancial information as to financial information. Legislators and regulators will have to address this topic in a reasoned and responsible way. Ultimately, laws and regulations must balance the need to punish incompetence and malfeasance while creating an environment that encourages the accounting firms to make the investments necessary to provide high-quality assurance on nonfinancial information. Eccles, Robert G., Michael P. Krzus, and Liv A. Watson. "Integrated Reporting Requires Integrated Assurance." Effective Auditing for Corporates: Key Developments in Practice and Procedures, edited by Joe Oringel, 161-177. London: QFINANCE Key Concepts, Bloomsbury Information Limited, 2012.

54. A reasonable assurance engagement is one in "which the practitioner reduces engagement risk to an acceptably low level in the circumstances of the engagement as the basis for the practitioner's conclusion. The practitioner's conclusion is expressed in a form that conveys the practitioner's opinion on the outcome of the measurement or evaluation of the underlying subject matter against criteria." In a limited assurance engagement, "the practitioner reduces engagement risk to a level that is acceptable in the circumstances of the engagement but where that risk is greater than for a reasonable assurance engagement as the basis for expressing a conclusion in a form that conveys whether, based on the procedures performed and evidence obtained, a matter(s) has come to the practitioner's attention to cause the practitioner to believe the subject matter information is materially misstated. The nature, timing, and extent of procedures performed in a limited assurance engagement is limited compared with that necessary in a reasonable assurance engagement but is planned to obtain a level of assurance that is, in the practitioner's professional judgment, meaningful. To be meaningful, the level of assurance obtained by the practitioner is likely to enhance the intended users' confidence about the subject matter information to a degree that is clearly more than inconsequential." International Federation of Accountants. International Standard on Assurance Engagements (IS AE) 3 000 Revised, Assurance Engagements Other than Audits or Reviews of Historical Financial Information, https://www ifac .org/publications-resources/international-standard-assurance-engagements-isae-3000-revised-assurance-enga, accessed March 2014.

55. "Suitable criteria exhibit the following characteristics: (a) Relevance: Relevant criteria result in subject matter information that assists decision-making by the intended users, (b) Completeness: Criteria are complete when subject matter information prepared in accordance with them does not omit relevant factors that could reasonably be expected to affect decisions made on the basis of that subject matter information by the intended users. Complete criteria include, where relevant, benchmarks for presentation and disclosure, (c) Reliability: Reliable criteria allow reasonably consistent measurement or evaluation of the underlying subject matter including, where relevant, presentation and disclosure, when used in similar circumstances by different practitioners, (d)

Neutrality: Neutral criteria result in subject matter information that is free from bias as appropriate in the engagement circumstances, (e) Understandability: Understandable criteria result in subject matter information that can be understood by the intended users. The suitability of criteria for a particular engagement depends on whether they reflect the above characteristics. The relative importance of each characteristic to a particular engagement is a matter of professional judgment. Further, criteria may be suitable for a particular set of engagement circumstances, but may not be suitable for a different set of engagement circumstances. For example, reporting to governments or regulators may require the use of a particular set of criteria, but these criteria may not be suitable for a broader group of users. Criteria can be selected or developed in a variety of ways. For example, they may be: Embodied in law or regulation, Issued by authorized or recognized bodies of experts that follow a transparent due process, Developed collectively by a group that does not follow a transparent due process, Published in scholarly journals or books, Developed for sale on a proprietary basis, and Specifically designed for the purpose of preparing the subject matter information in the particular circumstances of the engagement." Ibid. 56. Ibid.

5 7. "In a reasonable assurance engagement, the conclusion shall be expressed in a positive form. In a limited assurance engagement, the conclusion shall be expressed in a form that conveys whether, based on the procedures performed and evidence obtained, a matter has come to the practitioner's attention to cause the practitioner to believe that the subject matter information is materially misstated." Ibid.

58. "Reperformance" is when the auditor executes procedures or controls that were originally performed by the company.

59. The U.S. Public Company Accounting Oversight Board promulgated AT Section 101, Attest Engagements, which is substantively the same as ISAE 3000. pcaobus.org/Standards/Attestation/Pages/AT101.aspx, accessed March 2014.

60. ISAE 3000 is the international standard for providing assurance on nonfinancial information of all types. For example, ISAE 3000 is used to guide an assurance engagement on a GRI report, see Table 7.3, Assurance on Nonfinancial Information at Philips. The question we ask is will the international accounting firms accept the <IR> Framework as "suitable criteria" (see endnote 55) to assess whether an organization's integrated report adheres to the guidance provided by the International Integrated Reporting Council. International Federation of Accountants. International Standard on Assurance Engagements (ISAE) 3000 Revised, Assurance Engagements Other than Audits or Reviews of Historical Financial Information, https://ifac.org/publications-resources/ international-standard-assurance-engagements-isae-3000-revised-assurance-enga, accessed May 2014. For additional information, see endnotes 54-57.